As you leave college, you probably have a lot more with you than just a diploma. If you're like most recent college graduates, you have a lot of credit card debt. In fact, the average college graduate has over $2,000 in credit card debt when they leave school.
Some of it might still be from the spring break trip you took as a junior, but most of it was probably spent on things like textbooks, school supplies, and food. No matter what, debt is debt, and credit card debt is the worst kind. You should get rid of it right away. We know money is tight, but if you set up a payment plan, you can get out of credit card debt quickly, too.
Don't just do what you have to.
With interest rates on credit card balances as high as 18 to 23 percent, credit card companies would love it if you just paid the minimum amount every month. If you do this, the interest keeps adding up, and as your debt goes up, the credit card company keeps getting fatter. Put them on a diet and pay at least twice the minimum on your balance every month. In a hurry? Who's not? If you give up a few of life's little luxuries, you'll have more money to put toward your debt.
Trick-and-Turn
Credit card companies love to send out ads for cards that offer low or no interest on balance transfers for a certain amount of time. Don't throw them away so quickly. You can get them to help you if you are smart about how you use them. If you have a balance on one or more cards that costs you a lot in interest each month, you might want to move that balance to this new card with a low rate. You can save a lot of money this way. But be careful, because after the promotional period is over, most of these cards can hit you hard with rates that may be higher than what you're paying now. But if you think you can pay off the balance in the time offered by the promotion, switch.
Give up your savings
Even though it sounds bad, dipping into your savings is a great way to get out of debt. Put another way, the small amount of interest you get from your savings account is nothing compared to the amount of interest you pay on your credit cards. If only your money could give you an 18 percent return! If you pay off that balance in full, you'll save a lot of money in the long run.
Get on your knees and beg
If things get really hard, you might want to ask your family for help. It's hard to say no to a family member, and they're probably going to give you a pretty good interest rate, too. You just don't want to be known as the relative who always takes from the well. Asking for a loan from a family member should be done in a professional way. You could even suggest a written agreement to show how serious you are about paying them back.
Don't say "B" to your creditors.
If you still can't pay your bills, call your credit card companies and talk to them about your money problems. Tell them that you have no money left and will have to file for bankruptcy if you can't come up with a plan with them. The word "bankruptcy" is the one that credit card companies hate the most. If you do that, you won't pay them. They can't do anything else but work with you. Ask for a lower rate of interest and a longer time to pay back the loan. Even though they'll do everything they can to help, remember that you got yourself into this mess, and you're the only one who can get you out.
Paid off? Keep doing that
So you begged and borrowed and still managed to pay off your credit cards. Now, the hard part is to keep going like this. First, get rid of any extra cards. You shouldn't have more than one or two. Close the rest of those accounts as soon as you've paid off their balances. You'll be less likely to use them, and it's easier to keep track of fewer cards. Step two is to stop using credit cards completely. Leave your credit cards at home or cut them up if you have to, but only use them in an emergency.
